Inequality and taxation - Tax data-based insights into the redistributive effects of the Swiss tax system

In many countries, inequality between the rich and the poor has increased in recent decades. Some authors blame this on a retreat of the state, which is making less and less redistribu-tion through progressive taxes and social benefits. In the international context, Switzerland is regarded as a country with low economic inequality and little redistribution. In this paper, we present results with respect to the redistributive effect of the Swiss Tax system based on a novel database. It links tax and benefit data as well as the population register and was developed within the SNSF project "Inequality. Poverty Risks and Welfare State". On this ba-sis, the redistributive effects of taxes and social benefits can be quantified and analyzed holistically. Progressive taxation reduces income inequality, while deductions mediate the effect of taxes. We find inequality-reducing effects for social deductions and inequality-increasing effects for deductions relating to real estate, insurance and savings capital. De-ductions are therefore essentials instruments of the welfare state that should get more at-tention from an inequality perspective in academic discourses and political debates alike.